Two significant developments in the housing market that have emerged recently are increased demand for housing in lower-density areas, i.e. suburbs, and a higher number of existing buildings being converted to apartments. While these trends were already occurring prior to the COVID-19 pandemic, they’ve accelerated, according to a recent NAHB webinar.
NAHB chief economist Robert Dietz noted that increased construction activity was already occurring in lower-density areas due to the housing affordability crisis. As people shifted to telecommuting in response to COVID, it gave them the flexibility to live outside major metro areas. Similarly, supply and demand for multifamily rentals, which was growing pre-COVID, has reached a new height. John Affleck, VP of market analytics at CoStar, a provider of commercial real-estate information, said suburban multifamily housing comprised all the rental demand in the second quarter of 2020.
More specifically, the number of existing buildings being converted for multifamily use has reached an all-time high in the United States, according to data from Yardi Matrix. Nearly 800 structures were converted to apartment buildings in the 2010s, the highest number in the past 70 years, reports Yardi Matrix. Shuttered factories are historically the most popular for conversion, but office-to-apartment conversions were the most common in the last decade.
This surge in multifamily conversions bodes well for large cities from Chicago, New York, and Philadelphia to Los Angeles, Seattle, and Denver. Across the U.S., there are many old and historic buildings that are underutilized or abandoned and can be repurposed for residential use. Yardi Matrix data shows that 1,876 such buildings in the U.S. have been converted to apartments since the 1950s. These include mills, warehouses, factories, hotels, and hospitals.
For examples of top-shelf design in suburban housing and multifamily conversions, we need look no further than the 2019 Best in American Living Award winners.